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Stop Getting Gouged: All the Extra Banking Fees You Can Avoid

If there’s one thing banks love, it’s charging you extra for stupid things and hoping you won’t notice. Don’t let greedy banks upcharge you into oblivion. Here are some extremely common fees that are easy to avoid.

Fees are one of the worst offenders of wasted money. It may not seem like a lot, but they can add up quickly, they’re easily avoidable, and they don’t provide anything of benefit to you—it’s money down the drain.

Every single person with a bank account can get rid of these fees with just a little effort, and it’s one of the first steps you should take to get your finances in order.

Fees on Your Bank Account

We all need checking accounts, and in most cases they’re free…unless you take out too much money, don’t have enough money, or accidentally pay someone money that isn’t there. Basically, if you aren’t on top of your bank account, the banks will gouge you.

Thankfully, most of these are avoidable with a little research—and if you do get charged, you can often waive them with a simple phone call.

Overdraft Fees and Credit Card Late Payment Fees: Overdraft fees are probably the most notorious bank fees. In the first three months of this year, the three largest banks made $1.1 billion on overdraft fees.

Sometimes, you just don’t realize how much money is in your account and you write a check that sends you into the negative.

So naturally, the banks charge you money for not having enough money—often as much as $35 a pop.

The simple solution? Stop overdrafting and learn to manage your money better. If you’re still struggling, set up a low balance alert on your account so you know when your account is low.

Of course, mistakes still happen, and once in a while, you might overdraft. Provided you’re not repeatedly overdrafting, a simple phone call to your bank can fix this problem.

The gist is simple: make the call and ask them to waive the overdraft fee.

If they balk at your request, point out how long you’ve been a loyal customer. In most cases, they’ll waive the fee right there. I Will Teach You To Be Rich author Ramit Sethi has a great script you can follow to do just this.

You can also opt out of overdraft protection, which means you’ll bounce checks, but the fees are usually much lower. Talk to your bank to learn how.

The same goes for credit card late payment fees. If you pick up the phone and call your bank and ask them to waive the fee, they’ll usually do it, provided you’re not doing it every month.

The easiest way to avoid these fees is to meet the requirements for a free checking account.

Each bank differs, but let’s take Bank of America as an example. In order to skip out on the monthly fee, you need to either: have at least one direct deposit of $250 or more a month, maintain an average minimum balance of at least $1,500 over the month, or be a rewards member.

Maintaining a balance of $1,500 isn’t easy for everyone, but most of us probably have a direct deposit from work of at least $250. If you don’t, or your employer doesn’t support direct deposit, you can send yourself money using an online service like Square Cash, Venmo, or Paypal.

Doing this shows up in your account as an ACH transfer, which counts as direct deposit and should waive the fee. If you’d prefer to skip this altogether, though, try an online bank or credit union instead—most of them don’t have these fees.

Minimum Balance and Maintenance Fees: A lot of banks offer you a checking account for free, but require you to keep a certain amount of money in it—called a “minimum balance”. If you don’t, you’re charged around $12 a month to keep the account (called a “maintenance fee”).

Returned Check Fees: It’s common knowledge that if you bounce a check, you’ll get a fee (which you can often get refunded by following the same steps as if you overdraft).

What’s more obnoxious is when you get charged a fee because a check you deposited bounces when the sender doesn’t have the cash to back it up.

Typically, banks charge around $7 per check and are filed under “processing fees.”

Again, you can usually get these fees waived with a phone call. Over on I Will Teach You To Be Rich, Sethi asked the bank to remove the fees with a simple statement: “I’d like to have this removed.” That was it, they removed the $7 fee.

Fees for Customer Service

It’s actually pretty easy these days to find an ATM That doesn’t carry fees. If you don’t already have it installed, download your bank’s smartphone app. Most have an ATM locator option so you can easily find the closest free ATM, which is awesome.

Alternatively—and this is an even better option—there are plenty of banks that will refund all your ATM fees, so it’s like you never paid them. Switch to one of those and you’ll never worry about ATM fees again.

Sometimes, it feels like banks are trying as hard as they can to not be convenient. Want to take money out of your account from another bank’s ATM? Pay a fee.

Want a paper statement in the mail? Pay a fee. Accidentally get it sent to the wrong address? Pay a bigger fee. Thankfully, these charges are incredibly easy to avoid—you just have to know they exist in the first place.

ATM Fees: ATM fees are pretty well known, but that doesn’t make them any less annoying. If you use an ATM not owned by your bank, you’re charged a fee by both your bank and the ATM company. If you use ATMs a lot, this adds up pretty quickly.

Paper Statement Fees: It might seem ridiculous, but a number of banks charge you $1 or $2 for paper statements.

Big ones include TD Bank, U.S. Bank, and a number of regional banks. Sadly, there’s really no way around it, other than signing up for paperless statements (which you’ll get in your email) or changing banks.

Still, if you don’t need those paper statements, signing up for paperless statements only takes a couple of minutes on your bank’s website

Every bank differs, but you’ll usually find a link on your main account page.

Returned Mail Fee: Moving is hard enough as it is, but if you forget to change your address with your bank, things get costly too.

If you get paper statements a number of banks, including U.S. Bank and many regional banks don’t allow statements to be forwarded, and when they’re returned, you’ll get a surprise undeliverable fee of anywhere between $5 and $15.

The fix is simple: remember to change your address with your bank.

Other Account Fees

You probably knew about a few of the above—you may have even gotten dinged by them before. But there are all kinds of other fees you might not know about. You can get most waived or at least lowered if you know what to do, but sometimes it’s just about getting ahead of them and not be surprised by the fees.

Foreign Transaction Fees: When you travel abroad, your bank will charge you two fees: one conversion fee for taking money out of an ATM, and another fee for every time you swipe your card. We talked about this in our guide to travel-related fees, but it bears repeating here because they can add up really fast if you’re on vacation.

Avoiding these fees is all about preparation. If you travel a lot, pick a credit card that doesn’t have foreign transaction fees (there are quite a few). Banks range from charging you 1% to 3% per transaction on your credit card or debit card, so call them before you go and use the card with the lowest fee.

As for those ATM fees, most large banks have partner banks where you can withdraw cash for free. Just make sure you research ahead of time so you know where to go.

Credit Card Interest Rates: We all know that credit cards come with interest rates. That’s just part of the deal, right? Ideally, you shouldn’t carry a balance at all on your credit card, but if you do have some debt, you can negotiate your interest rate.

The Washington Post points out that it often just takes a phone call to get your interest rate lowered.

The older you are, the more likely that phone call will work. Only 33% of people aged 18-29 had luck lowering their interest rate, but 59% of people aged 30-49 did, and 79% of people aged 50-64 were able to lower their rate. Regardless, this script should help you along the way.

Stop Payment Fees: Sometimes, you need to cancel a check. Maybe you wrote the incorrect amount, or a check got lost in the mail. You can call your bank and cancel that check, but it’ll cost you to do so. Every bank varies a little on how much they’ll charge you, but it’s typically between $30 and $35.

Like a lot of the fees on this list, your magic bullet is a phone call. If you’ve been a longstanding customer and don’t request to stop payment checks very often, you can call up your bank and ask them to waive the fee.

Depending on your bank, you should be able to get it removed.

Wire Transfer Fees: Wiring money to and from your bank account costs…well, more money. Most banks charge around $15 for incoming wire transfers and $25-$30 for outgoing transfers. That adds up pretty quick if you’re moving money around a lot.

Thankfully, it’s 2015 and wire transfers aren’t really necessary anymore. In most cases, you can send money to other people or business with a service for no additional fees. It should be just as quick as a wire transfer.

Banks love fees and even when you know about them, it’s hard to track them sometimes. Thankfully, a tool like Mint will give you a breakdown of your fees for the month, so it’s easy to monitor. When a new one pops up, you’ll know what to do to get it removed and make sure it doesn’t happen again.

Source: Lifehacker

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How to Save Money When It Feels Like You Don’t Have Enough

My three-year-old daughter has five piggy banks. There’s a big one, for college, and smaller ones, for treats. Beyond the fact that it’s incredibly cute, we do this little ritual, dropping pennies into each one, to start a habit. She doesn’t completely understand, but one day she will, and by then saving will be second nature.

Mastering your money is about habit-building, whether you’re three or 33. If you want to eat healthier or exercise more, you start with small goals.

Throw out all your processed snacks, take the stairs instead of the escalator—we all know the tricks.

It’s the same with taking control of your finances.

But habits are slow-growing, right? If they weren’t, we’d all be in perfect shape and lounging on our sailboats by now. And it can be hard to imagine saving if you feel like you’re just getting by as it is.

So, start with small goals: Saving is a muscle; the sooner you start, the stronger you can get. Here’s how to begin.

1. Focus On Retirement

Before you make any drastic changes to your budget, make sure that you’re making the smartest savings move of all: investing in your retirement. Assuming you don’t have credit card debt and you pay all of your bills on time, every time, the next most important thing is to make retirement a priority as you’re starting to save for your future.

I know that retirement feels far off, and when money’s tight right now it’s easy to assume the you-of-the-future will deal with it, but the earlier you start to put money in a retirement fund, the more time you’re giving it to grow.

It’s not magic, it’s math: Compound interest means your money, whether it’s in a 401(K) or a Roth IRA—does the hard work for you.

If your company offers a 401(K) match, use it. Generally speaking, you should contribute as much as you humanly can.

2. Make A Plan

As with most things in life, being prepared sets you up for success. I’m obviously passionate about financial planning; I started a company devoted to it. And the reason I was able to start that company was because I had a financial plan, both for myself and for my business.

A plan doesn’t have to be complicated, and you don’t need to have a lot of money to create one. The less money you have, the more you need one. To kickstart your savings, a simple budget is key. I love the 50-20-30 plan.

Here are the basics:

  1. 50 percent (or less) of your total monthly income should go to critical essentials (groceries, rent, mortgage, utilities, transportation)
  2. 20 percent (or more) goes towards future financial goals, like paying down debt, building an emergency fund, and saving for retirement
  3. 30 percent (or less) of your take-home pay goes to the fun stuff, like vacations, restaurants, shopping, and entertainment

If the numbers need to be shuffled in a given month, deprioritize this bucket list.

Most critically, don’t expect to reach all your savings goals overnight. But once you’ve created these categories and start faithfully contributing to each, you won’t even feel the sting of saving. In fact, you’ll feel so in control of your money and your life, you can stop worrying about it. Which brings us to…

3. Automate It

To the extent that your bank account allows, set automatic deposits so that the money is whisked out of your paycheck and into your savings. (Many banks will let you set up automatic transfers, or use an app like Acorns or Chime.) Out of sight truly is out of mind, so you won’t even miss the money you never knew you had.

One caveat: Don’t set your budget and forget it. At some point in the next few years, you’ll come into more money. You’ll get a raise, or a new job, or move in with a significant other and cut your expenses in half.

When any of those things happen, revisit your budget. Make sure that you’re still saving the right amounts of money, and since you did such a rock-star job of living off your old income with your old expenses, pretend you never got that raise and put the extra towards—you guessed it—retirement.

Source: Vogue

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4 Smart Ways To Pay Off Student Loans

According to the personal finance website Make Lemonade, there are more than 44 million people who collectively owe $1.5 trillion in student loan debt.

What’s the best way to pay off student loans?

Here are your four best strategies to slay your student loans for good.

1. Refinance Your Student Loans

Your best bet to pay off your student loans fastest is to refinance student loans.

Student loan refinancing allows you to combine your existing federal and private student loans into a new, single student loan with a lower interest rate.

You can choose a fixed interest rate or variable interest rate, and flexible loan terms ranging from 5-20 years. With student loan refinancing, you will make one monthly payment and have only one student loan servicer.

You can refinance federal student loans, private student loans or both. You can check your new interest rate online for free within two minutes and no impact to your credit score. You can also apply online.

To get approved, you typically need to be employed (or have a written job offer), have some work experience, a strong credit score and income, and a history of financial responsibility. When you refinance federal student loans, you do give up certain benefits such as forbearance and deferral.

However, many lenders now offer some form of employment protection and other hardship benefits if you later lose your job or can’t afford your payments.

Let’s look at an example with this student loan refinancing calculator. Let’s assume you have $100,000 of student loans at 8% payable over 10 years, and you can refinance those student loans with a private lender at 3%.

With student loan refinancing, you would lower your student loan monthly payment by $248 and save $29,720 in total.

2. Consolidate Your Student Loans

With federal student loan consolidation, you combine your existing federal student loans into a single Direct Consolidation Loan.

Unlike student loan refinancing, federal student loan consolidation does not lower your interest rate or monthly payment.

Rather, student loan consolidation helps you organize your federal loans into a single student loan with a single monthly payment.

With a Direct Consolidation Loan, your resulting interest rate is a weighted average of your existing student loans, rounded up to the nearest 1/8%. Therefore, your student loan interest rate could increase slightly with student loan consolidation.

3. Increase Your Monthly Student Loan Payment

Wait, increase my monthly payment?

At first glance, this may sound expensive and not practical for many. However, it’s one of the best strategies to pay off student loans faster.

For example, if you can increase your monthly student loan payment by even $100 per month, you can save significantly on interest costs over the long-term.

With this student loan prepayment calculator, let’s assume that you have $100,000 of student loans at an 8% interest rate with a standard 10-year repayment term.

By paying $100 more per month, you can save $5,554 in interest costs and pay off your student loans 1.08 years earlier. Here is how much time and money you can save if you increase your student loan payment by the following monthly amounts:

  • Extra $200 / month: $9,871 total savings (1.92 years earlier)
  • Extra $300 / month: $13,325 total savings (2.67 years earlier)
  • Extra $400 / month: $16,157 total savings (3.25 years earlier)
  • Extra $500 / month: $18,521 total savings (3.75 years earlier)

4. Make A Lump Sum Payment

If you are not able to make a higher monthly payment (or if you have enough funds to pay extra), you can make a one-time, lump sum extra payment on your student loans.

Make sure to instruct your student loan servicer in writing that any extra payments should be applied to the current monthly payment (not a future monthly payment).

If you have credit card debt or a mortgage that has a higher interest rate than your student loan debt, then paying off the higher balance loan may make better financial sense. Similarly, you could use those funds to contribute to a retirement plan and invest to earn a higher return than the cost of your debt.

Summary

Here is a recap:

1. Student loan refinancing = lower your interest rate, payoff student loans faster

2. Federal consolidation = same interest rate, organize your student loans

3. Higher monthly payment = same interest rate, reduce principal

4. Lump-sum payment = same interest rate, reduce principal

Source: Forbes

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How Much Should I Spend on Groceries?

Everybody spends money on food, and most of that money goes toward groceries. But, how much money should you be spending on groceries?

Some people ask this important question (especially those starting out), while some people never do. In this article, I’ll answer the big grocery budget questions, and give my own take on how much to budget.

Why Bother Worrying About the Cost of Groceries?

Food is critical for survival. Everybody needs it. And, what do humans do best when there’s a demand for something? They find a way to make money off it. Now, I’m not saying they are wrong to do that, especially when those services add value. But still, most food is not free, unless you’re the hunting or gathering type.

So, where do people go to exchange money for food? Quite a few places, actually! But, in general, most people will either dine out or go to the grocery store. Since you pay for more than just the food when you dine out, the grocery store is usually more cost-efficient.

But, even if it’s cheaper, the question still remains: how much should I be spending on groceries there?

What Do the Experts Say Groceries Should Cost?

Let me start by getting the expert opinions out-of-the-way. And by expert, I mean the United States Department of Agriculture (USDA). Every month, the USDA releases a Cost of Food Report. This report highlights how much families should spend based on average nutrition diets.

These diets fall into four plans:

  1. Thrifty
  2. Low-Cost
  3. Moderate-Cost
  4. Liberal

So how do their recommendations work? They take their 4 plans and break them up into “age-gender” groups, as well as family size groups. Below, I’ve included a sample from September 2018, if you want to check out your own numbers.

Where do you fit into these plans? Personally, these reports don’t impress me.

A lot of people reading these reports want guidance for purchasing groceries, but instead, reading these feel like thesis research. There are a lot of numbers, with only a few explanations, and way too many footnotes. Nobody wants that. Plus, if you have a family of 3, or more than 4, you’re out of luck.

When I first found this resource, I was really excited! I thought it might help me reduce how much I spend on groceries. I was wrong. Turns out, my wife and I have lived below the “thrifty” plan for all 4+ years of our marriage. And you know what? We eat pretty healthy.

The USDA needs to put these reports in a format more people will find useful. If they want us to have this information, why make us work so hard for it? Would some pictures kill them? Maybe a fancy infographic? Anyway, even if they made it flashier, I still think their costs are a little high (at least where I shop – Meijer).

What Do I Say Groceries Should Costs?

So, what do I say groceries should cost? Well, that depends on your family size and dietary restrictions, and I don’t have all those answers. But, I can tell you what my wife and I spend and how we keep our costs low.

When we were first married and living together, we realized we didn’t know how much we should spend on groceries. And, like any good and clueless newlywed, I asked Google. I found one site recommending $70/week for a family of two, if you’re on a tight budget (and we were). To this day, I don’t remember where I found this number, but it has served us well (and challenged us).

Having a weekly budget was a little too much micro-management for me, so we eventually made it a $280/month budget ($70/week over 4 weeks). And, not only do we have enough for food each month, but we usually have extra for treats! Still, sticking to this budget requires some serious focus and a little planning ahead of time.

Since my wife cooks most of our meals (I bake our treats and do most of the dishes), she makes most of our grocery decisions. Because of this, I conducted a mini-interview with her yesterday to pass the time on our two-hour drive home. When it comes to shopping for groceries and sticking to our budget, her tips are below (paraphrased).

How to Save When Shopping for Groceries

First, meal planning for the upcoming week is really important. When you decide what you’re going to eat next week, you can make a list of everything you need. By making a list in advance, you don’t wind up buying a bunch of food you don’t really need. Pro Tip: Order your list in the order of your grocery store aisles. This will save time in the grocery store and avoid going back for stuff.

Also, coupons are critical to keeping your costs low, but only if they’re for things already on your shopping list. If you join store reward programs, they might even send you coupons based on what you regularly buy. Also, If you buy something on sale that you didn’t need, you didn’t save any money. You just spent more than you needed to. Don’t be a sucker.

Sometimes, you don’t even need to get a coupon to get a good deal. Most grocery stores have some pretty great sales if you’re there at the right time. That’s why she prefers to go grocery shopping once per week. If you go once per week, you see more of the sales. And, you don’t go back to buy one thing and wind up spending more than you intended.

And, this should go without saying, but you can always save by not buying things you don’t need. This includes, but is not limited to, soda, ice cream, and kale chips. This is difficult for me, because I love ice cream. Like, it’s a problem. Still, it’s an easy sacrifice during expensive months, like when you’re expecting a lot of guests for birthdays or holidays.

Meat can get pretty expensive, but you can save by buying family packs. Even if there’s just one or two of you, cook what you need, and freeze the rest. Also, try cooking with large pieces of meat and freeze the leftovers. She makes a terrific roast, and then turns the leftovers into sandwiches and noodle dishes.

Do you purchase soda or other bottles that have a recycle payback? Return your bottles! In Michigan, we get a generous 10 cents back for every can or bottle we return. And, since you pay these deposits when you buy the stuff, you’re throwing away money when you don’t return them. 5 or 10 cents per bottle might not sound like a lot, but that adds up!

If you have the time, you can also try making more things from scratch. Ounce for ounce, most things made from scratch are cheaper than the ready-to-go mixes. Plus, this way, you can make it exactly the way you like it!

How Much Should You Spend on Groceries?

How much you spend on groceries is entirely up to you. Like most of personal finance, shopping for groceries can be very personal. We all have our preferred tastes, brands, and stores, so we just need to make the decisions we think are best for us and our families.

Now that you know how much the USDA suggests and how much my wife and I spend, maybe you can make a better estimate on how much you should budget for groceries. At the end of the day, it’s about asking yourself what you really need and what you can really afford. There are so many ways to save money if you put in a little extra work.

If you want to spend $1,000/month on groceries, that’s totally fine. No judgment. Enjoy it! Just never tell yourself you have to, unless maybe you have a really, really large family to feed.

This is by no means the definitive guide on budgets for groceries. Still, I hope it gives a little more insight on how much you should and could be spending.

Source: Personal FI Guy